Trading Agricultural Commodities

Trading Agricultural
Commodities

By www.ProfitableTradingTips.com

 Pork bellies, live cattle, Durham
wheat, weather forecasts from Brazil, price
supports for exports to Asia.

http://profitabletradingtips.com/trading-investing/trading-agricultural-commodities

 Welcome to the world of trading agricultural
commodities.


 Trading agricultural commodities takes place
under two general categories, agricultural
(grains, and food and fiber) and livestock and
meat.


 Agricultural commodities are traded in the
commodities futures markets.


Here is a sample of agricultural commodities
and where they are traded:

Grains, Food and Fiber
Commodity Primary Minimum Symbol
Exchange Quantity
Corn CBOT 5000 bu C/ZC
(Electronic)


Corn EURONEXT 50 tons EMA

Oats CBOT 5000 bu O/ZO
(Electronic)
Rough Rice CBOT 2000 cwt RR

Soybeans CBOT 5000 bu S/ZS
(Electronic)


Rapeseed EURONEXT 50 tons ECO

Soybean CBOT 100 short SM/ZM
Meal tons (Electronic)
Soybean Oil CBOT 60,000 lb BO/ZB
(Electronic)
Wheat CBOT 5000 bu W/ZW
(Electronic)


Milk Chicago 200,000 lbs DC
Mercantile
Exchange
Cocoa ICE 10 tons CC

Coffee C ICE 37,500 lb KC

Cotton No.2 ICE 50,000 lb CT

Sugar No.11 ICE 112,000 lb SB


Livestock and Meat
Lean Hogs Chicago 40,000 lb LH
Mercantile (20 tons)
Exchange
Frozen Pork Chicago 40,000 lb PB
Bellies Mercantile (20 tons)
Exchange


Live Cattle Chicago 40,000 lb LC
Mercantile (20 tons)
Exchange
Feeder Chicago 50,000 lb FC
Cattle Mercantile (25 tons)
Exchange


Weather in the Ukraine, Brazil, and
the North American Great Plains

 It is often quite possible to profit from the
news in day trading agricultural commodities.


 Traders often wait for agricultural reports in
order to understand where fundamentals of
supply and demand are going.


 Although food is consumed locally it may
have been produced anywhere in the world.


 Certainly prices across the globe reflect the
ability to transport agricultural products
virtually anywhere, if the price is right.


 The final price of a commodity depends upon
supply and demand.


 If a drought threatens wheat production in the
Ukraine or unusually heavy rains threaten to
destroy much of Brazil’s soybean
harvest, prices are bound to go up.


 In trading agricultural commodities, keeping
an eye on the weather forecasts is part of the
job.


 Likewise, if American consumption of beef
products suddenly falls there may be more
supply of live cattle and feeder cattle than
demand and the price will fall.


 Those trading agricultural commodities such
as wheat often consult United States
Department of Agriculture agency reports
such as the Wheat Outlook.


 This report looks at supply, use, prices, and
trade for wheat, including supply and demand
prospects in major importing and exporting
countries.


 The report shows United States wheat
information by class. The November 15, 2012
report starts as follows:


 “Projected U.S. wheat ending stocks for
2012/13 are lowered 44 million bushels as
higher feed and residual disappearance more
than offsets a reduction in projected exports.


 Production for 2012/13 is raised 1 million
bushels based on the latest estimate from the
September 30 Small Grains report.


 Feed and residual use is projected 95 million
bushels higher reflecting the September 1
stocks that indicated higher-than-expected
June-August disappearance.” - etc.


Making a Profit in Trading
Agricultural Commodities

 With precise estimates of crop forecasts and
demand issues, trading agricultural commodities
over the longer term becomes a matter of
fundamental analysis.


 However, market reaction to breaking news
and reports often leads to market inefficiency


 at which times technical analysis of price
patterns is often the better guide to making a
profit trading agricultural commodities.


Trading Agricultural Commodities

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